Nearly one in 10 loans in commercial mortgage-backed securities are troubled, as the CMBS delinquency rate reached a record high of 9.65% in April, according to loan research firm Trepp LLC.

Up from 9.42% in March, the rate saw a large jump after staying relatively steady since December. “You would expect to see that delinquency would continue to increase through the end of the year,” said Julia Tcherkassova, an

analyst at Barclays Capital, who said the rate could hit as high as 12%. She said she expects it to level off after the end of the year.

The uptick comes even as commercial real estate prices in numerous markets around the country have been on the rise. But borrowers are still running into trouble faster than distressed loans can be resolved, particularly as a growing number of loans made during the peak years – when loose underwriting was prevalent – reach maturities. Read More »

President Obama at the Facebook headquarters in Palo Alto, Calif., U.S., on Wednesday.

President Obama said he’s concerned that housing is “probably the biggest drag on the economy right now” after being asked yesterday about the intractability of the housing crisis that is now entering its fifth year.

Obama was responding to question during Wednesday’s Facebook town hall from a homeowner in Williamsburg, Va.:

The housing crisis will not go away. The mortgage financing for new home buyers with low to moderate income is becoming very difficult. As President, what can you do to relax the policies that are disqualifying qualified home buyers from owning their first home? How can you assure the low to moderate home buyers that they will have the opportunity to own their first home? Read More »

The Securities and Exchange Commission’s probe into Fannie Mae and Freddie Mac appears to be hinging on a simple question: What’s the definition of a subprime mortgage?

The SEC is investigating whether the mortgage titans’ disclosures to investors of subprime and other risky mortgages may have misled investors about their decisions to take on more risk. So far, four current or former officials of the companies have acknowledged that they could face civil charges from the SEC, including Daniel Mudd and Richard Syron, the former chief executives of Fannie Mae and Freddie Mac, respectively.

The trick in this case is that there never was an agreed upon definition of a “subprime” mortgage. Fannie and Freddie got into even more trouble by buying up lots of Alt-A mortgages, which is even harder to define but generally consisted of loans between prime and subprime where borrowers didn’t have to document their incomes.

So what are some of the potential definitions of subprime? Read More »

The White House is proposing that government support of Fannie and Freddie be phased out, but it’s unclear what the impact of such a move would be on the fragile housing and mortgage market. WSJ real estate reporter Nick Timiraos fielded questions from readers in a live chat on February 17. Replay the live event. Read More »

After several months of improvement, mortgage delinquencies rose in May, according to loan data tracked by research firm LPS Applied Analytics.

Nearly 9.2% of all loans were 90 days or more past due at the end of May, up from 9% one month earlier. Those numbers exclude the share of loans in foreclosure, which remained unchanged at 3.18% in May from the previous month. (LPS has posted its monthly set of slides online.)

The numbers raise questions about how enduring the improvement in mortgage delinquencies earlier this year will prove to be, particularly because delinquencies typically improve during February and March. The number of loans that were 30 days past due jumped in May from April, while the share of loans that were 60 and 90 days late also increased.

Already, other signs show that delinquencies may be hitting a plateau rather than declining. Read More »

Loan-modification programs, such as this one in California, have helped to limit the number of mortgages whose payments will rise this year.

This story in the WSJ on Monday’s looks at how the problems that many housing analysts have long feared about the potential shocks from option adjustable-rate mortgages may not come to pass—in no small part because many of these loans have already defaulted.

Option ARMs allowed borrowers to make minimal payments initially that led loan balances to grow. Loans “recast” and begin requiring full payments on the larger balances, usually five years after origination or when the balance hits a pre-set ceiling. For years, analysts have worried about housing aftershocks from a wave of loans, originated from 2005-07, that would being jumping to sharply higher payments this year.

But “recasts are now a non-issue,” says Ramsey Su, a San Diego investor and former real-estate broker specializing in foreclosed properties. “What people said was going to happen this April, it already happened over the last six months,” says Mr. Su.

The government released its latest batch of figures on the results of its mortgage modification program. The upshot: the numbers improved, albeit from very low levels.

Since the government’s HAMP, or Home Affordable Modification Program, started last spring, more than 900,000 borrowers have entered into trial modifications. That’s a fairly good chunk of borrowers who are able to stay in homes they might not otherwise be able to, but it’s putting more attention on how many trial modifications become permanent.

Here’s a look at some of the numbers:

So far, just 66,465 have successfully moved into permanent modifications, or around 7% of the total. Last month, that figure was at… Read More »

Amid the commotion of hotel owners and hotel operators fighting about cutting costs in this downturn, there are occasions in which operators pull out all the stops to make sure that owners don’t go under.

Case in point: Hyatt Hotels Corp. this month helped the owner of the 966-room Hyatt Regency Jacksonville in Florida avoid default on its $150 million securitized mortgage.

The hotel, owned by Chartres Lodging Group LLC, had gone delinquent on its mortgage last month, according to debt-rating company Realpoint LLC. The hotel’s occupancy and average rate, which registered 56% and $119, respectively, at the end of June, have suffered amid the downturn and a sharp drop in corporate meetings, Realpoint says. Read More »

Last week offered a rude awakening for anyone who assumed the housing bust was over. As existing home sales slumped and home-building stocks sank, Laurie Goodman of Amherst Securities Group came out with a scary pre-Halloween report about the extent of the “shadow” housing inventory—the overhang of likely-to-be-foreclosed homes that have yet to hit the market.

Various pundits have estimated the size of this shadow inventory in the millions. Ms. Goodman put a more specific estimate on it: 7 million homes. That’s well above the 5.1 million annual U.S. sales rate for previously occupied homes, as reported for August.

“We are concerned that, in light of this overhang, the housing market stabilization is temporary, based on seasonal factors, and prices can deteriorate further,” the report concludes.

Of course, there are always some homes destined for foreclosure. But usually the number … Read More »

Here’s a sobering thought for those excited by recent signs that the housing market may be bottoming out: Homeowners who fall behind on their mortgage payments have become much less likely to catch up again.

The report from Fitch Ratings Ltd., a credit rating firm, focuses on a plunge in the “cure rate” for mortgages that were packaged into securities for sale to investors. The study excludes loans that are guaranteed by government-backed agencies as well as those that were never bundled into securities. The cure rate is the percentage of delinquent loans that return to current payment status each month.

Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006. For Alt-A loans—a category between prime and subprime that typically involves borrowers who don’t fully document their income or assets—the cure rate has fallen to 4.3% from 30.2%. For subprime, the rate has declined to 5.3% from 19.4%.